Federal, state money infusion for water system repairs could aid Flint's economy, experts say

Flint's long-term economic decline isn't being helped by the water crisis.

But when state and federal aid starts flowing to fix an aging network of lead water pipes, the economy could see a boost, experts said.

Work on the solution could be a boon for businesses and contractors tasked with replacing more than 15,000 lead water pipes, based on the experience of other cities that have suffered environmental disasters.

The fixes won't be cheap, and the $80 million President Barack Obama promised for Flint last week won't cover the bill. It could take 15 years and $60 million or more to replace pipes that contaminated Flint's tap water, according to Gov. Rick Snyder's emails released last week, but Mayor Karen Weaver and other city officials have said replacing the entire system could cost $1.5 billion.

Business leaders, residents and environmental experts weighed in on challenges and opportunities facing Flint, which is trying to provide safe tap water while pursuing long-term funding. The money could help fix the water problem and stem damage to Flint's economy, property values and the city's beleaguered image, officials said.

"The ability to sustain the short-term focus and solve the underlying infrastructure problem, that's always the challenge and will be the challenge here," said Stephen Barnes, director of the Louisiana State University Economics & Policy Research Group.

Snyder has appealed Obama's denial of a disaster declaration, which would provide more financial help.

A briefing released along with Snyder's emails last week indicate there are more than 15,000 lead water pipes in Flint that need to be replaced at an average cost of $4,000 per pipe.

The estimate, totaling $60 million, falls short of other recovery projects following environmental disasters.For example, Enbridge Energy Partners LP has spent an estimated $1.2 billion cleaning up an oil spill that polluted the Kalamazoo River in 2010.

"No question there are business opportunities, despite how heartless or cold that might seem," said Flint native Jimmy Greene, president and CEO of the Midland-based Greater Michigan chapter of Associated Builders and Contractors Inc. "It's disingenuous to pretend that this won't be a contractor boon."

The recovery effort likely will provide work for excavators, underwater welders, gravel and cement companies, and firms that specialize in heating, ventilation and air conditioning, Greene said.

Nationwide, the country's buried drinking water infrastructure needs more than $1 trillion worth of upgrades over the next 21 years, according to the Colorado-based nonprofit group The American Water Works Association.

"This figure does not include the cost of removing lead service lines on private property," AWWA CEO David LaFrance said in a statement.

Flint resident Mary Dye is frustrated with her private property, a two-bedroom, fire-damaged home three miles east of downtown.

The house is for sale. Dye is asking $10,000, though she and a friend paid $55,000 nine years ago. But since listing the home in November, there's been no open house, no offers.

Now, there's no chance of selling amid the water crisis, she said.

"I'd take $2,000," said Dye, 56, who cleans homes outside Flint for a living and fills up bottles of water at each home for cooking and for her dogs.

Flint property values were plummeting before the water crisis, falling 20 percent from 2012 to 2015, according to Genesee County records.

The impact of a prolonged water crisis on property values is unclear in a city and region trying to diversify following a loss of auto industry jobs, particularly at General Motors Co.

GM remains the county's largest employer with 7,500 employees, but that's down from more than 80,000 in the late 1970s, according to a 2011 study by Michigan State University.

A study following the 1979 nuclear meltdown on Three Mile Island in Pennsylvania shows a gap between perceptions about the economic impact of a crisis and reality.

In July 1979, 32 percent of people polled believed that their property values had fallen and 9 percent said they knew people who had sold a home and received less money due to the meltdown, according to the 1988 study The Three Mile Island Crisis Psychological, Social, and Economic Impacts on the Surrounding Population.

"However, subsequent studies of real estate sold near (Three Mile Island) showed no significant change in either volume or value of sales in the year following the crisis," researchers wrote.

Flint & Genesee Chamber of Commerce leaders are awaiting results of a survey sent to 1,200 members that could help pinpoint the economic impact of the water crisis.

"Then we can zero in on their needs," chamber CEO Tim Herman said. "There's going to have to be a lot of resources pumped into Flint by the state and federal government to get the infrastructure right."

The crisis complicates his attempts to lure businesses and residents to Flint and capitalize on momentum that includes about $400 million invested in downtown since 2000.

That figure includes money spent on University of Michigan-Flint residence halls, a proton beam treatment center and renovating a mass transit terminal.

"You take a couple steps forward and three steps back," Herman said. "We're fighting a lot of negativity. The people here are strong and resilient, and I'm confident we will overcome this."